What You
Need To Know

BNY MELLON SUSTAINABLE BALANCED FUND

Welcome to the Education Center

This is where to find out more about this fund: how it works,
what the various terms mean and how you can invest.

Case Studies

Here we explain why we believe active engagement can drive better investment decisions and share examples of our engagement work.

 

The Value of Active Engagement

Why we believe that active engagement, which is when we partner with the companies we invest in to help improve their sustainability ratings, results in better outcomes for both investors and society.

How Engagement Can Affect Executive Compensation

A rundown of our active engagement work with an infrastructure fund.
 

Call to Action

The responsible investment landscape is changing amid climate change governance risks. What are we doing about it?

Avoiding Turbulence: A Review of a Budget Airline Carrier

How did our ESG review of a budget airline affect investment decisions?

Newton’s Diversity Engagement and Voting Policy – Video Transcript

So the benefits of diversity have long been acknowledged by investors, namely that it improves diversity of thought, improves decision-making and avoids dangerous groupthink. Yet despite this, companies and boards have still been too slow to react. Of the 2700 companies in the MSCI ACWI, over 1/5 of them still have all-male boards and as such, as investors, we really wanted to do something to demonstrate to the companies that we invest in that we care about diversity and we think it's important. Under our diversity voting and engagement policy, we look at two aspects of a company. First of all, we look at the number of women on the board – we’re looking for at least 30%. We completely acknowledge that gender diversity isn't the only measure of diversity, but it is the only one that all companies consistently report on and therefore it’s the only one we can really vote on at the moment. The second thing we look at is the company's diversity and inclusion policies throughout the whole business, so things like basic statistics, workforce engagement, maternity leave policies and flexible working programs. If we see a company doesn't meet our expectations in just one of those categories, we’ll engage with the company and explain that this could lead us to vote against them in the future. So the results of this policy since May 2018 – when we first implemented it – is that we voted against the chair of nomination committees at 21 separate AGMs. Now, this doesn't sound like much in the context of Newton’s 400 equities, but actually the whole point of this policy was to open up conversations with companies and show them that we’re taking diversity as a topic very seriously, and that's exactly what we’re seeing happening. In terms of seeing improved performance in terms of more women on boards and better disclosure, we do acknowledge that sustainable change is going to take time. Any company can simply hire in diversity, but what we want to see companies doing is creating a real culture and environment where diversity can actually flourish. This is just the start of our diversity voting and engagement work and we really hope that we’re going to see continued improvement from the companies that we invest in in the future, and we look forward to sharing updates with you soon.

The Value of Engagement – Video Transcript

What is the value of engaging with companies we invest in on behalf of our clients?

I think it’s a really natural part of being an active shareholder actually, and I think we see the benefits in a number of different ways. Firstly, we get to know more about the companies that we engage with and that’s important. Secondly, there is good evidence to show that, at least on some occasions, engagement can help drive financial performance and, lastly, and still very importantly, we think we can help companies improve their environmental, social or governance structures and outputs and that’s a benefit to the companies in the long term as well.

What work has been done to prove that active engagement works?

There’s a really fascinating and I think important paper that’s out of Cambridge University and the London School of economics, which looks at this specifically. They look at a decade's worth of engagement based in the US. They come up with a really fascinating conclusion which is in the approximately 20% of cases where engagement was successful, you saw a substantial abnormal return after that successful engagement, over 7% in the period afterwards, and interestingly no negative abnormal return for those companies where engagement wasn't successful, so their conclusion is that engagement seems to be an activity with only upside and I think that's really interesting and we’re taking that on board with our work.

Call to Action – Video Transcript

Well Newton has been engaging on the topic of climate change for well over a decade, it's a problem that we are really concerned about as long-term investors. And when we’ve been engaging with companies, it's been to try and understand the long-term sustainability of their businesses and what role they're taking in trying to slow down climate change. One sector that we’ve been working with particularly and have been engaging quite a lot with has been the oil and gas sector, but we've been pretty frustrated that they haven't really been responding to calls to action and disclosing more information to investors. So last year, along with another major investor, we drafted an open letter to the Financial Times, calling for the oil and gas sector to take much more action to describe their long-term business strategies and also set concrete emission-reduction targets. It was very successful. It was signed by 60 global investors, representing £10.4 trillion* in assets under management, really echoing the concern investors have for this business as well as the whole of the sector’s actions around climate change.

* $12.8 trillion

The Hidden Side of Supply Chains – Video Transcript

Here at Newton we’re really excited about the investment opportunities of electric vehicles and what they’re going to be able to do for the world and also climate change. But with the many positives that come with this space, there are also negatives – negatives that we became aware of after reading some NGO reports highlighting child labor in the cobalt supply chain. Now cobalt is a key material that goes into electric vehicle batteries and, seeing as we've invested in some of the biggest electric vehicle battery manufacturers, we began heavily engaging with our investments to understand what they were doing to address this issue. We’re now co-leading specific engagements on child labor with three of the biggest players in this space, and we’re asking those companies to provide more transparency around their supply chains, around the auditing and the risks and also to reduce the chances of exploitation. And as a result, we have been supporting the Responsible Cobalt Initiative’s work and now sit on the steering committee for the PRI-supported engagement programme on responsible cobalt sourcing.

Frequently asked questions

Fund Information

Before you go any further, it’s important that you download and read these checklists and fund documents first.

 

BNY Mellon Sustainable Balanced Fund

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BNY Mellon Sustainable Balanced Fund

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BNY Mellon Sustainable Balanced Fund

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About us

We’re BNY Mellon. We’ve been in Investment Management for over 100 years. We’re actually eight companies or ‘firms’ in one, each with its own area of expertise. In the case of this particular fund, the stock portion is managed by our affiliate NEWTON and the bond and bond-related portion is managed by MELLON INVESTMENT CORPORATION.

 

The Bank of New York Mellon Corporation, doing business as BNY Mellon, is the parent company.

It’s a worldwide banking and financial services holding company headquartered in New York City.

Newton Investment Management is a global investment management firm owned by BNY Mellon.

We work with our clients to deliver their desired investment outcomes using our responsible, theme-based approach, fundamental research and deep industry experience.

This is our global investment management firm.

It specialises in institutional and high-net-worth individual asset management, business banking and shareholder and investor services.

Important Disclosures

Investors should consider the investment objectives, risks, charges, and expenses of a mutual fund carefully before investing. Download or visit im.bnymellon.com to obtain a prospectus, or a summary prospectus, if available, that contains this and other information about the fund, and read it carefully before investing.

All investments involve risk, including the possible loss of principal. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Asset allocation and diversification cannot assure a profit or protect against loss.

Risks

Bonds are subject to interest-rate, credit, liquidity, call and market risks, to varying degrees. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes and rate increases can cause price declines.

Equities are subject to market, market sector, market liquidity, issuer, and investment style risks, to varying degrees.

Currencies are subject to the risk that those currencies will decline in value relative to a local currency, or, in the case of hedged positions, that the local currency will decline relative to the currency being hedged. Each of these risks could increase the fund’s volatility.

Investing in foreign denominated and/or domiciled securities involves special risks, including changes in currency exchange rates, political, economic, and social instability, limited company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries.

Impact investing and/or environmental, social and governance (ESG) managers may take into consideration factors beyond traditional financial information to select securities, which could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. Further, ESG strategies may rely on certain values-based criteria to eliminate exposures found in similar strategies or broad market benchmarks, which could also result in relative investment performance deviating.

Recent market risks include pandemic risks related to COVID-19. The effects of COVID-19 have contributed to increased volatility in global markets and will likely affect certain countries, companies, industries and market sectors more dramatically than others. To the extent the fund may overweight its investments in certain countries, companies, industries or market sectors, such positions will increase the fund's exposure to risk of loss from adverse developments affecting those countries, companies, industries or sectors.

BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, encompassing BNY Mellon's affiliated investment management firms, wealth management organization and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the Corporation as a whole or its various subsidiaries generally.

This material has been distributed for informational purposes only. It is educational in nature and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Views expressed are those of the author stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this communication and subject to change. Forecasts, estimates and certain information contained herein are based upon proprietary research and are subject to change without notice. Certain information has been obtained from sources believed to be reliable, but not guaranteed. Please consult a legal, tax or financial professional in order to determine whether an investment product or service is appropriate for a particular situation.

No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. BNY Mellon Investment Adviser, Inc. (the fund’s investment adviser), Newton Investment Management Limited, Mellon Investments Corporation (the fund’s sub-advisers) and BNY Mellon Securities Corporation are subsidiaries of The Bank of New York Mellon Corporation.

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